B&O In ‘Strategic Review’ to Instill ‘Stronger Urgency’
Bang and Olufsen (B&O) is doing a “strategic review” and trying to instill a “stronger sense of urgency and alertness” in the company, CEO Tue Mantoni said Wednesday on a conference call. The review, which follows the company’s finding “performance in key growth markets to be unsatisfactory,” will be finished by midyear, he said. Sales and profit of B&O stores also were “under our desired level,” Mantoni said. He was named CEO six weeks ago, replacing Kalle Hvidt Nielsen.
B&O will review all business units, including AV, automotive and retail, to ensure that they achieved their “full potential,” Mantoni said. There are “nuggets of excellence that have been underleveraged in the past,” he said, declining to elaborate. Nielsen aimed to “stabilize” B&O’s retail business in the 2010-2011 fiscal year (CED Aug 25 p3). The CE supplier opened or upgraded 40 dealer-operated shops while closing 47 in its fiscal year’s first nine months, through February. B&O ended Q3 with 686 dealer locations, down from 705 in June 2010. The number of B&O store-within-a-store operations fell to 271 from 300.
B&O also postponed delivery of its BeoSound 5 Encore to next fiscal year’s Q1 from this year’s Q3 to ensure that “when we take the next step that the quality and performance is up to our standards,” Mantoni said. “It was simply a question of ensuring that we have a product of the highest quality."
The BeoSound 5 Encore, originally scheduled to be released last year, will be the first to feature B&O’s Netlink, designed to replace MasterLink with wireless technology. Encore 5 is similar to MasterLink, but adds an Ethernet connector and drops the hard drive. The original BeoSound 5 combined a 10.5-inch LCD controller with an attached 500 GB BeoMaster 5 storage device with capacity for a user’s music collection. The product was designed around a Calisto operating system and More of The Same (MOTS) software. MOTS analyzes about two minutes of each song in a music collection and links them together based on a song’s sound, dynamic and rhythm. The Encore version can be linked to an iTunes library, B&O said. The original BeoSound 5 was built on the BeoSound 3200 with an 80 GB hard drive, released in 2003.
Mantoni conceded that the company isn’t seeing “the AV business develop as expected” and needs to improve its “sales, marketing and retail execution.” B&O said its Q3 operating profit improved to $6.9 million from $6.1 million despite taking a $4 million charge, including $2.7 million tied to Nielsen’s departure. Q3 revenue rose to $158.5 million from $144.7 million, driven by a rise in automotive sales to $21.8 million from $9.6 million. The automotive group benefited from the launch of sound systems in the Ashton Martin Virage, Ashton Martin One 77 and BMW 6 series, and Audi A6 and A7, the company said. AV sales were $131.6 million, flat with a year ago when the company introduced its BeoVision 10, a 46-inch LCD TV. Nine-month revenue from B&O’s IcePower amplifier technology grew to $12.3 million from $10.6 million a year earlier, most the business have come from sales of amplifier modules. In B&O’s enterprise division, which includes sales to luxury hotels, sales improved to $5.22 million from $4.45 million a year earlier. Development expenses rose to $22.4 million from $20.1 million. The gross margin grew to 39.8 percent from 38.9 percent.